Have you ever checked your bank balance and wondered where all your money went
if this sounds like you then more likely than not you were practicing money
habits that will keep you poor forever therefore in this video I will share
with you seven expensive habits that will keep you poor forever and if you're
new to the channel then hit the subscribe button below for more
life-changing content hop in number one spending more than you
make let's face it spending money is fun in fact there is scientific evidence to
support this phenomenon when you're considering buying something your brain
releases dopamine dopamine is a chemical produced by our brains that plays a
starring role in motivating behavior it gets really soon we take a bite of
food when we have sex after we exercise and when we spend money in an
evolutionary context it rewards us for beneficial behaviors and motivates us to
repeat them this is why humans have such a hard time resisting spending and often
the spending is only curbed when all funds have been depleted and credit
cards have been maxed out however when people come into money this problem
perpetuates maybe you got a bonus at work or maybe you got a promotion these
increases income trigger our inclination to spend as we continue to chase that
dopamine high but it's not just the dopamine high that makes us open our
wallets and spend we also feel an intense need to fit in with our peers
and one way we can maintain our social status in society is by having the
nicest clothes or the newest car unfortunately this incessant spending is
keeping you broke you see if spend every dollar you make you will never be able
to save money invest or retire what separates the rich from the poor is the
management of their money whereas the majority of people spend every new
dollar they earn the rich maintain their modest lifestyles as their incomes rise
this allows them to begin saving more and more money as a cash flow increases
but the rich don't just hoard this money they then deploy this money into
investments like Roth IRAs mutual funds investment properties or their own
business to allowed this cos to grow further therefore if you want to become
wealthy then you must avoid spending more as your income Rises haba number
two sacrificing future happiness for present pleasure there are two types of
people in this world those who live for today and those who build for Tamar
and unfortunately the majority of people fall into the first category now don't
get me wrong enjoying the present is very important because no one knows how
long each of us have to live but more likely than not you will make it to
tomorrow and if you are always trading future rewards for present pleasure then
you will never be rich this trade-off is actually one of the big differentiators
between the rich and the poor when the rich make more money they forego the
desire to spend the money today and instead sock it away into savings and
investments that grow in value and provide financial resources that can be
used in the future to maintain their current standard of living in financial
terms delaying gratification is known as delay discounting and it takes place
when someone decides to discount the value of future rewards to immediately
gratify themselves even though accepting a lesser reward isn't exactly rational
the rich know that future payoffs will be greater than present rewards and
studies strongly support how this restraint from present gratification can
lead to larger income realizations in the future in a study of over 2,500
people participants were asked whether they would hypothetically accept a
smaller sum of money $500 USD or a larger sum $1,000 USD after a delay
which could be one day one week one month six months or a year when the
researchers use machine learning algorithms to model the relationship
between individuals tendency for delay discounting and the other self-reported
variables they found that delay discounting was more predictive of
income than age ethnicity race and height therefore if you truly want to
become rich then you must take the future into perspective whenever you're
making financial decisions although it is good to take care of everything in
the present do your best to save for your future hobbit number three you
think you're too young to worry about saving let's be real when we're young
our primary focus is to look cool and fit in with those around us to do this
we buy the newest clothes and the latest gadgets to feel like we are part of the
in-crowd we are much more worried about our social status than saving for a
house or for a retirement this carefree attitude leads us to spending every
penny we earned leaving little to support us down the road in reality you
were never too young to start saving and just as importantly in
sting take Warren Buffett for example he bought his first stock at age 11 and
over the course of numerous decades has leveraged his mastery and investing to
become one of the richest men in the world let's use an example to illustrate
just how important it is to get serious about your finances from an early age
say we have two people Mike and Steve Mike begins investing at age 19
investing two thousand dollars a year at 12 percent for just eight years meaning
that his lost investment is at age 26 Steve on the other hand waits until he's
27 to start investing and invest two thousand dollars a year at twelve
percent until age 65 who do you think will end up with more money at age 65
well Steve seems like the logical choice because he invested for 39 years
compared to Mike's eight years Mike actually ends up with an extra seven
hundred thousand dollars of received because of when he started investing so
as this example proves it is never too early to start saving and more
importantly investing your money habit number four not tracking your spending
we all think we know where our money comes from and where it ends up sadly
that's not true for most of us we might be aware of our major expenditures like
buying a car or getting a new phone but the small things usually it up or
finance is more than the big ones for instance when I used to not track my
expenses more often than not I would open up my credit card statement at
Monson and be completely shocked by how much bigger my bill was than I
anticipated the truth is that all the nights out
coffees and clothes I was buying was adding up to much more than a large
expenditure would every month was squandered any chance I had at saving
money it was only once it came across a quote by Peter Drucker what is a
measured isn't managed that I knew that I had to change my ways and started
tracking my expenses being the lazy person that I am I avoided setting up
complicated apps or programs and simply began writing down all my purchases in
my iphone notes this simple yet effective strategy allowed me to see
exactly where my money was going and I still use this technique to this day
however the strategy didn't solve all my money issues because while I was
tracking my expenditures I still found myself overspending which leads us to
habit number five habit number five lack of budget
now maybe you are already tracking your spending if so great but if you don't
spend according to a plan then you may still find yourself in financial trouble
you see you could be tracking the fact that you are spending hundreds of
dollars on drinks and clothes every month causing you to rack up a
significant amount of credit card debt which will leave you in as much trouble
as if you weren't tracking at all this is where a budget comes in and one of
the best ways to budget is by using the twenty thirty fifty method this
budgeting technique works by dividing your income in the following three ways
fifty percent is designated to living expenses like rent utilities and
groceries the next thirty percent goes towards entertainment costs like going
out to eat or seeing a movie the final twenty percent is meant to go right into
your savings account this means that you can now track your expenses according to
the amounts you've designated at the start of each month ensuring that your
money goals are achieved habit number six ignoring your debt as a June 2019
Americans are in more than 500 billion dollars worth of credit card debt with
the average household having a balance of almost $7,000 on their cards this
insane amount of debt doesn't even factor an auto loans student debt and
the largest debt mortgages in short the United States has a dead issue and part
of this problem is that debt has gotten out of hand for so many people that the
only way they can cope with this financial struggle is by ignoring it in
fact the issues gotten so bad that 10% of Americans say that they don't even
think they will ever be free of credit card debt so how has this issue
propagated to this extreme debt has become an issue in Western culture for a
few reasons firstly most people are unaware of the almost infinite ways
there are to make money meaning that their income is limited to what their
employer will pay them which more often than not is not a lot second people are
in a constant struggle to compete with their peers in order to feel a sense of
social validation which they do through spending which has been perpetuated by
the rise in social media finally dead operates in a vicious cycle
when debt isn't paid off interest charges are added to the already
insurmountable balance meaning that the debt grows bigger and bigger over time
when this happens people begin to ignore their debt completely
which is cause the United States to have more than 13 trillion dollars worth the
data withstanding so if you want to avoid this bad habit then make paying
your debt a top of the list item on your agenda work out a plan for this and
stick to it no matter what habit number seven
constantly upgrading your electronic gadgets it seems like every year
technology companies released new phones computers and tablets making the ones we
currently have even more obsolete than they already were
well the newest guy just rarely have any significant differences in their
functionalities these companies know that on a psychological level as humans
are wired to want the latest electronics but not because of their functions but
because of the social status that they can offer us for instance every year
Apple comes out with at least one new version of the iPhone and while some
years the changes between models are significant most years they aren't but
what does change is the fact that you no longer have the newest model iPhone
which leaves you as a social outcast if the rest of your social circle decides
to upgrade their phones and this phenomenon is pervasive amongst every
material item in the world like clothes and of course carbs
besides these upgrades being rather irrational they erode our ability to
save money upgrading your phone can easily cost a couple hundred dollars
which could be put to much better use if it was saved
or better yet invested in short it's okay to not have the newest gadgets and
if you aren't accepted by your peers because of it then you're probably not
hanging around with the right people anyway so when you feel the urge to
upgrade your electronics coming on take a page out of William Shatner's playbook
when he says if saving money is wrong then I don't want to be right thanks for
watching if you want to go from the life you have to the life you deserve then
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